There's no hurry to jump on board the good-time balloon
The problem with putting a balloon up too early, is that you become a sitting duck for the enemy.
I RECEIVED an email from a subscriber suggesting that there is no longer any point harping on about the bad news because everyone who wants to be in cash is already in cash and the only game in town now is waiting until ''the balloon goes up''.
Now, I'm a military man - that is to say, my dad was in the air force and I lived my childhood on military bases - and I think my subscriber has slightly misused the expression.
To me, ''the balloon going up'' is the portent of bad news. It was a World War I expression that described the practice of an artillery battery on a battlefield that would send up an observation balloon with an observer suspended in a basket, who would report on where the enemy was and act as a range finder, allowing the artillery to direct its fire with maximum effect.
The enemy would see the balloon and know that a barrage was coming and seek to find cover.
So the expression ''the balloon's gone up'' was a warning to hide.
It was also applicable in London during the Blitz in World War II.
When the winches were released and the barrage balloons went up, it told the citizens of London to expect an air raid.
But, of course, the expression could have lost its ''bad-news'' tag by now and may just mean ''something's about to happen''. So we'll go with that.
I rather like the idea that a day is coming when the balloon will go up in the stockmarket.
In other words, a day is coming when a big signal goes out to the whole stockmarket that, at last, the bull market has begun and it's time to unwind those term deposits and buy equities once more.
How glorious would that be? A big sign that it is ''safe'' again, that a rising tide is going to lift all boats and the odds of making money in equities have flip-flopped from hopelessness to certainty.
Of course, there are a few things wrong with this scenario.
The market doesn't work like that. Talk to anyone about the 1987 crash and they will tell you there was no specific event that caused the top of the market. It was simply a herd event. A drop that turned into a waterfall. There was no announcement, just a drop of bearishness that turned into a trickle, that turned into a stream, that turned into a river, that turned into a waterfall. The bottom of the market is just as subtle.
March 13, 2003, saw the start of a 57.8 per cent rally.
March 10, 2009, saw the start of a 64 per cent rally. What happened on those days? Nothing specific, unfortunately. No announcement, no balloon going up.
So there won't be a big signal, but you have to ask, ''Will there at least be a sign?'' Yes, there will be, and my stockbroker colleagues and I have a few for you. Signs of the bottom:
■An ex-stockbroker is laying paving stones in your back garden.
■A fund manager is painting your house.
■You are no longer worrying about your job.
■You no longer worry about debt.
■Your house price has stopped going down.
■Interest rates are close to zero.
■You have no investment income.
■An economist is on the front of The Australian Financial Review saying: ''Maximum bearish.''
■The Future Fund declares it is in 100 per cent bonds.
■A broker delists from the stock exchange.
■No broker has a marketing department.
■Good companies are being bid for by management.
■Listed companies are producing better than expected results.
■Companies that don't need to raise capital raise capital.
■You don't know the name of the head of the European Central Bank.
■You don't know what the Spanish 10-year bond yield is.
■The stockmarket is going up.
Of course, the problem with putting a balloon up too early is that you immediately become a sitting duck for the enemy. So the best advice is stay in the trenches until the balloon has been up for a while. You won't miss much.
Marcus Padley is a stockbroker with Patersons Securities and the author of stockmarket newsletter Marcus Today. His views do not necessarily reflect those of Patersons.